A recent Leger Poll found that 49 per cent of Canadians think the federal government’s new target of 500,000 immigrants a year is too many, while fully 75 per cent are concerned the plan will result in excessive demand for housing and social services. For his part, the immigration minister, Sean Fraser, tells Canadians they need not worry: immigrants will provide the labour required to build the housing stock they’ll need.
The majority of Canadians have always
welcomed immigrants and believe they benefit the economy and themselves. What worries
them today is the prospect of mass immigration that they believe the housing
market cannot absorb without much higher prices. They know the minister’s
soothing reassurance is not supported by experience. Past immigration did increase
the labour force but did not prevent high housing costs. Excessive regulations
and rent control are the main reasons housing is so expensive, not a shortage
of labour.
Immigrants not only add to the demand for
housing, they also increase congestion for a wide range of public services:
doctors, hospitals, schools, universities, parks, retirement homes, and roads
and bridges, as well as the utilities that supply water, electricity and
sewers. In theory, the supply of all these things could be expanded reasonably
rapidly. In practice, expansion is slow. But the main reasons for that are, not
a shortage of labour, but inadequate planning, insufficient financial resources
and, as a result, construction that lags demand.
The case for keeping annual immigration at
traditional or even somewhat lower levels rests on more than the effect on
house prices and public services, however. Immigration also depresses the wages
of low-income workers, which results in greater income-equalizing transfers and
the higher taxes required to pay for them. It also reduces employers’
incentives to adopt labour-saving technology, an important source of growth in
labour productivity and wages, and it allows employers to avoid the cost of
operating apprenticeship programs to train skilled workers.
Japan’s widespread success in using robots
to deal with labour shortages caused by its aging population illustrates what could
be done in Canada. German employers operate apprenticeship programs to train
skilled workers in the numbers German industry needs. In this country, such
programs could relieve the shortage of skilled labour while benefiting people
already here, rather than new immigrants brought in specially to take highly
paid skilled jobs currently going asking.
Despite the Leger numbers suggesting many
Canadians have concerns about big increases in the rate of immigration, the
debate about it tends to be one-sided. We hear from the many groups that benefit
from mass immigration: employers, immigration lawyers and consultants, real
estate developers, political parties that traditionally do well in immigrant
communities, idealists who want us to “imagine there’s no countries” and so on.
Opposing them, the Leger numbers suggest,
is a majority that is not at all opposed to immigration in principle but begins
to inform itself on the subject and maybe even become politically active only
when the costs become so large they can’t be ignored any longer.
In Switzerland during the 1970s an economic boom
led to labour shortages and immigration was liberalized. It turned out that the
need to produce housing infrastructure and public services for these immigrants
actually worsened the labour shortage. The silent majority of Swiss citizens
organized and took advantage of the opportunity to get government policy
changed by demanding a public referendum that ultimately ended the liberal
immigration policy.
In Canada, changes in policies come
through parliament and the election of politicians. Numbers like those in the
Leger poll may begin to suggest to politicians that they can increase their
election chances by catering to the majority who would prefer somewhat reduced
immigration but also a fundamental reform of the system currently used to
determine the number and characteristics of immigrants.
Such a reform would put greater emphasis
on market forces rather than politicians and bureaucrats in setting immigration
levels. Immigrants would be admitted only if they possessed a formal offer of
employment in Canada that paid at least the average earned by workers in the
area where they would be employed.
Under this system, employers’
self-interest would ensure that workers would have the skills and personal
characteristics required for success on the job. The requirement for minimum
pay would prevent floods of immigrants competing with Canada’s low-wage workers
and ensure those who did come had the income needed for a life free from the
need for public subsidies.
Worrying about immigration is not enough.
Only the election of politicians committed to this kind of reform will restore
mental peace.
Herbert Grubel is an emeritus professor of
economics at Simon Fraser University and a senior fellow at the Fraser
Institute.
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